Those pesky Dow transports are threatening to rain on the broader stock market’s rally parade.

Whether Friday’s selloff among the major stock indexes — the worst of 2012 — is the sign of a top or a brief pause before another move higher is one of the main questions on investors’ minds. Based on sentiment indicators and market momentum, one would think the latter will take shape.

U.S. stock futures are in the black Monday morning after the Greek Parliament over the weekend approved a package of spending and wage cuts. Dow Jones Industrial Average futures were up 76 points, S&P 500 futures gained 9 points and Nasdaq 100 futures gained 17 points as of 6 a.m. Eastern Time.

The action follows relief rallies overseas. Asian and European stock markets posted modest gains following the deal, but the sight of thousands of people rioting in Athens and protesting these unpopular austerity measures has tempered enthusiasm.

Even as U.S. stocks are poised to regain much of Friday’s declines, some signs of caution are building. The Dow Jones Transportation Average, a 20-member index of airlines, railroads and trucking companies, dropped 1.04% on Friday, its biggest decline since late November. The index shed 2.14% for the week.

The transports are highly cyclical stocks that are sensitive to swings in the economy. The index, which includes bellwethers FedEx and UPS, is often seen as a leading indicator for stocks and the broader economy.

In February the Dow transports are down 1.2%, while the Dow industrials are clinging to a 1.3% gain, which is starting to raise some eyebrows among Dow theorists. According to the century-old “Dow Theory,” both the Dow Jones Industrial Average and Dow Jones Transportation Average need to move in tandem to confirm a market’s trend.

The theory, created by Charles Dow, highlights how making goods is one leg of the industrial economy and moving those goods around is the second leg, so their trends should be in sync. Any additional divergence following last week’s action could be a sign that the broad stock rally is in its final stages.

To be sure, there’s no need to panic just yet. One week of action doesn’t necessarily translate to the start of a new trend. The Dow transports are still up 30% from their early-October lows, while the Dow industrials are up 20% in the same time frame.

But considering the 2012 rally, few investors would be surprised to see stocks pull back from current levels. Europe is simmering and corporate profits appear vulnerable.

The prevailing theme on the Street, however, is any sign of weakness will likely be used as a buying opportunity.

“It is challenging to suggest a major market correction is in the cards, but rather some modest pullback is more probable,” says Tobias Lefkovich, a strategist at Citigroup.

Friday’s Action: The Dow Jones Industrial Average dropped 89.23 points, or 0.69%, to 12801.23, its biggest decline since Dec. 28. The blue-chip index suffered a 0.47% weekly decline, its second drop out of the last three weeks. The Dow is up 4.78% this year.

The S&P 500 dropped 9.31 points, or 0.69%, to 1342.64. It edged 0.17% lower for the week, snapping a streak of five straight weekly gains.

The Nasdaq Composite shed 23.35 points, or 0.8%, to 2903.88. But the tech-heavy index’s face-ripping start to 2012 is still intact, up 11.5%.

Morning MarketBeat Daily Factoid: On this day in 2000, the last original “Peanuts” comic strip appeared in newspapers. The finale came a day after cartoonist Charles Schulz passed away. Peanuts ran in newspapers for nearly 50 years before moving to syndication.

-Steven Russolillo

MARKET SNAP:

At 5:40 a.m. EDT, S&P 500 futures are 0.6% higher at 1349.1. European bourses are also higher, with the FTSE 100 rising 1.2%, the DAX 0.4% and the CAC 40 in Paris 0.4%. In Asia, stocks closed in positive territory, with the Nikkei 225 and the Hang Seng rising 0.5%.

Stocks to Watch

Apple Inc. (AAPL) sued Motorola Mobility Inc. (MMI), saying Apple’s iPhone 4S is protected under a license agreement from Qualcomm Inc. (QCOM). The lawsuit, which was filed Friday, is part of an effort by the Cupertino, Calif., consumer-electronics giant to ward off any injunctions from Motorola, according to the court documents.

ITT Corp. (ITT) pushed back the date it plans to report quarterly earnings by two weeks, citing the complexity of reviewing financial data following the industrial conglomerate’s recent spinoffs. Thought the company still said its 2011 revenue grew, the results fall slightly short of analysts’ expectations.

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